Rollback of 50% cut boosts competitiveness amid weak demand
Chennai: Providing relief to exporters, the government on Monday restored the RoDTEP rates, which was halved with value caps from February 23. However, the restoration is till March 31, leaving exporters once again in uncertainty.
“RoDTEP benefits shall be available at the rates and value caps as applicable on February 22, 2026, thereby withdrawing the earlier restriction of 50 per cent notified on February 23, 2026. The rates are restored with effect from February 23, 2026, to March 31, 2026, for all eligible export products,” the government notification said.
The scheme is a remission of duties and taxes paid on the exported products. The World Trade Organisation complaint scheme, that came into force in 2021, refunds duties, taxes and levies at the central, state and local level, including prior stage cumulative indirect taxes on goods and services used in production. The duties on distribution of exported products too are refunded under the scheme.
The rates as a percentage of Freight on Board value covers 8555 tariff lines. The rates range between 0.01 per cent for a few gems and jewellery products to 4.3 per cent for woven fabric.
These rates were cut by 50 per cent across all tariff lines where the rebate applies, and value caps also were reduced by half.
In price-sensitive sectors, even a 1–2 per cent increase in costs can decide whether orders are won or lost.
WTO rules permit such remission because it merely neutralizes domestic taxes on exports. Cutting these rates, therefore, had raised exporters’ costs at a time when India’s shipments are already facing weak global demand, supply disruptions and rising compliance burdens, eroding competitiveness in price-sensitive markets.
Further, revising RoDTEP rates frequently had made it difficult to build rebates into long-term pricing and contracts.
Cutting rates arbitrarily makes little sense unless earlier rates were wrongly fixed, finds GTRI.
"Also, the RODTEP restoration decision is valid for exports made up only March 31, that is one week from now. No one knows what rates apply after March 31. This creates huge uncertainty for the exporters in such uncertain times. No export contracts can factor RODTEP benefits in such cases," it said.
